FSA: New regulation has not staved off industry concerns over mis-selling
Concerns regarding mis-selling remain in the industry despite the recent implementation of the Financial Services Authority's (FSA) regulatory regime for general insurance (GI) on 14 January 2005.
According to consumer magazine, Which?, the decision could increase the risk of mis-selling. While the consumer watchdog applauded the new rules for offering consumers further protection, it also expressed concerns that the new regime has brought complex protection products and simpler GI products under the same regulatory umbrella.
Louise Hanson, head of campaigns for Which?, said: "Complex insurance like income protection, critical illness, and life assurance are now treated the same as simpler products like house and car insurance. This is a major concern, as it is much harder for people to choose the right product in these areas."
The Association of British Insurers (ABI) however, does not think the implementation of GI regulation will have a negative effect on consumers.
"We have worked closely with the Financial Services Authority to ensure that consumers benefit both from high standards of protection and from a competitive market," said Nick Starling, director of general insurance at the ABI.
Despite the ABI's optimism, a recent survey from Mercer Resource Consulting revealed that only 2% of employers believe regulation will reduce their chances of being sold inappropriate healthcare products.
The study also showed that 68% of respondents do not fully understand the implications of the new regime and 23% said they did not think it would have any impact.
Steve Clements, european partner at Mercer, said: "While the new rules are designed to protect companies, it seems that the message has not yet reached employers."
